Dollar Switches to Defend Position amidst U.S Shutdown Risks
The US dollar starts the new week on the softer side after solid gains last week as the greenback defends positions against its major trading partners across currency markets.
The greenback was on the defensive on Monday ahead of a slew of U.S. economic releases that could provide further clarity on the Federal Reserve’s rate path, while the growing risk of a government shutdown there also came into sharp focus.
Data showed that dollar index (DXY) retreated amidst concern over a U.S government shutdown. FX majors are gaining against a softer greenback, while investor focus shifted to US shutdown risks ahead of President Trump’s meeting with congressional leaders before the October 1 deadline.
President Donald Trump is scheduled to meet with the top four congressional leaders on Monday in a high-stakes sit-down at the White House that could determine whether the federal government shuts down this week.
Funding is set to run out at 12:01 a.m. Wednesday unless Trump and leaders on Capitol Hill can reach an eleventh-hour agreement.The Democratic leaders of the House and the Senate, Hakeem Jeffries and Chuck Schumer, both of New York, as well as their Republican counterparts, House Speaker Mike Johnson of Louisiana and Senate Majority Leader John Thune of South Dakota, are expected to attend.
FX moves were largely subdued in the early trading session, though the dollar gave up some gains after ending last week stronger on the back of reduced Fed rate-cut bets.
“…the question now is whether the jobs data is weak enough to justify further Fed rate cuts,” ING said in a commentary note. Following a sharp rebound last week, analysts said dollar hadn’t had such a slew of good data in a while, and positioning squeezes likely helped the move.
Against the yen, the dollar was down 0.2% to 149.24, after having risen over 1% against the Japanese currency last week. The yen extends its gains against other G-10 and Asian currencies on growing prospects of a Bank of Japan (BOJ) rate hike.
Minutes from the BOJ’s July meeting indicated policymakers remain open to further rate hikes if growth and inflation progress as expected.
BOJ policy board member Noguchi earlier said that the need to raise rates is increasing more than ever and that the upside risks to the economy currently outweigh downside risks.
The euro rose 0.15% to $1.1717, while sterling edged 0.11% higher to $1.3418. #Dollar Switches to Defend Position amidst U.S Shutdown Risks GTCO Delivers 63% YTD Return Ahead of Dividend Payment
